2Q16 earnings review
During the earnings call, CFO Marianne Lake emphasized the bank’s strong consumer banking business. JPMorgan Chase has one of the lowest loan-to-deposit ratios and has been holding back on its large deposits base for a long time.
The company’s card posted 8% growth in sales volumes and robust transaction growth. Overall, credit quality remains strong except in the energy loans segment. The provision for loan losses increased 50% to $1.4 billion but was lower on a sequential quarterly basis.
JPMorgan Chase remains focused on its cost-cutting strategy. During the quarter, it slashed its operating expenses by 6%. Its overhead ratio—a measure of operating expenses to revenues—came in at 56% compared to 61% a year ago and 60% in the previous quarter.
JPMorgan Chase is the first major bank to report its second quarter earnings. It has a weight of 8.1% in the Financial Select Sector SPDR ETF (XLF) (VFH). Peers expected to report this week are Wells Fargo (WFC) and Citigroup (C). Bank of America (BAC) and Goldman Sachs (GS) are scheduled to report next week.